By Anayat Durrani and Staff
The collapse of Silicon Valley Bank and now Signature Bank has left many wealthy investors nervous about what will happen to their money, including EB-5 investors. Regulators shut down Signature Bank, a $110 billion commercial bank, the largest bank involved in EB-5, and third-biggest failure in U.S. banking history, on Sunday as customers worried by SVB’s closure pulled their funds.
The collapse of the banks raised concern among clients including those at other banks, particularly customers with deposits of more than the FDIC's $250,000 deposit insurance limit.
In a joint statement on Sunday, the FDIC, Federal Reserve and Department of the Treasury said the U.S. will guarantee the full deposits of both SVB and Signature Bank. President Biden announced on Monday that Americans should “have confidence that the banking system is safe."
"EB-5 investors' deposits are fully insured for the time-being," said Robert Sloposky, senior vice president and group director at Signature Bank. "Prior to FDIC reverting back to the $250,000 amount, we will have advance notice."
The impact on EB-5 investors with funds in Signature Bank
Signature Bank’s deposits and assets have been transferred to Signature Bridge Bank, N.A., and will be operated by the FDIC, according to a statement by FDIC. The transfer of all the deposits was completed under the systemic risk exception. The statement went on to reassure Signature Bank’s customers that, “All depositors of the institution will be made whole. No losses will be borne by the taxpayers.”
"The president of the bank has remained intact and FDIC is overseeing the operation," Sloposky said. "It's business as ususal and all normal banking activity is resumed. Wires are being processed in normal fashion."
Signature Bank, established in 2001, a full-service commercial bank in New York City with 40 branches, had the largest EB-5 escrow agent and EB-5 funds in escrow for a majority of EB-5 projects. Before the collapse, on March 9, Signature Bank released a statement, reassuring customers of its “strong, well-diversified financial position and limited digital-asset related deposit balances.” However, the SVB closure created panic, which caused customers to move deposits to bigger banks and led to its failure. Jittery Signature customers withdrew more than $10 billion in deposits, according to reports.
New leadership at Signature Bank
Signature Bank has since posted a statement on the company website reiterating its commitment to its customers and noted that the FDIC appointed Greg Carmichael as the bank’s Chief Executive Officer. The bank said “with all of the deposits and substantially all of the assets of former Signature Bank,” they will continue to serve customers, offering a full suite of loan, deposit and banking.
“Due to the actions of the Federal Reserve, U.S. Treasury, and FDIC, your deposits are not at risk. The bank is running business as usual and is well-positioned to serve you. Your single point of contact will not change,” the statement said. The company has since posted a FAQ on its website to address any customer questions as well as a phone number to a call center for Signature Bridge Bank, N.A.
Signature Bank had total assets of $110.4 billion and total deposits of $88.6 billion as of December 31, 2022. The FDIC said it will operate Signature Bridge Bank, N.A. “to maximize the value of the institution for a future sale and to maintain banking services in the communities formerly served by Signature Bank.”
"Prior to the new RIA legislation, Signature Bank was holding around $2.5 billion at any one time," Sloposky said.